DOMINADOR RAYMUNDO vs . LUNETA MOTOR CO.

EN BANC
[G.R. Nos. 399902 & 39903. November 29, 1933.]
DOMINADOR RAYMUNDO, petitioner-appellant ,
MOTOR CO., ET AL., respondent-appellees.

vs.

LUNETA

A. M. Zarate, for appellant.

Jose Agbulos, for appellee Luneta Motor Co.
No appearance for the other appellee.
SYLLABUS
1.
PUBLIC UTILITIES; EXECUTION AND GARNISHMENT; PUBLIC
SERVICE LAW, SECTIONS 15 (i) AND 16 (h) CONSTRUED; CODE OF CIVIL
PROCEDURE, SECTIONS 450 and 452 CONSTRUED; CERTIFICATES OF PUBLIC
CONVENIENCE, WHETHER LIABLE TO EXECUTION AND GARNISHMENT. The
word "property" as used in section 450 of the Code of Civil Procedure
comprehends every species of title, inchoate or complete, legal or equitable. The
test by which to determine whether or not property can be attached and sold
upon execution is whether the judgment debtor has such a benecial interest
therein that he can sell or otherwise dispose of it for value. (Reyes vs. Grey
[1911], 21 Phil., 73.) As under the Public Service Law the holder of a certicate of
public convenience can sell it voluntarily, there is no valid reason why the
certificate cannot be taken and sold involuntarily pursuant to court process.
2.
ID.; ID.; ID.; ID.; ID. Certicates of public convenience have come
to have considerable material value. They are valuable assets. In many cases the
certicates constitute the cornerstones on which are builded the business of bus
transportation. Certicates of public convenience are included in the term
"property" in the broad sense of the term, and as a species of property, are liable
to execution.
3.
ID.; ID.; ID.; ID.; ID. Certicates of public convenience secured by
public service operators are liable to execution, and the Public Service
Commission is authorized to approve the transfer of the certicates of public
convenience to the execution creditor.
DECISION
MALCOLM, J :
p

The question squarely raised in these two cases concerns the forced sales of
certicates of public convenience held by public service operators and the liability
to execution of such certificates.
Breaking into the narration of the facts at the proper point, we nd Nicanor
de Guzman, signing as Guzco Transit, purchasing trucks from the Luneta Motor
Co. and to pay for them executing a series of promissory notes guaranteed by a
chattel mortgage on several trucks. On failure of De Guzman or Guzco Transit to
pay the promissory notes, suit was brought in the Court of First Instance of
Manila for the collection of the amount outstanding and unpaid. When the
complaint was presented, a writ of attachment was obtained against the
properties of the Guzco Transit, and as a consequence garnishment was served
on the Secretary of the Public Service Commission attaching the right, title, and
participation of the Guzco Transit in the certicates of public convenience issued
in cases Nos. 25635, 23914, and 24255 covering the bus transportation lines
between Manila and Cardona, Rizal, and between Manila and Pililla, Rizal. These
certicates were ordered sold by the Court of First Instance of Manila, and in fact
the certicates of public convenience Nos. 25635 and 23914 were sold to the
Luneta Motor Co. as the highest bidder. The approval of the sheri's sale was
prayed for before the Public Service Commission, and is one of the cases under
review.
Going back a moment, it is necessary to insert in the statement of facts
that on July 6, 1932, or nine days after the certicates were attached by the
Luneta Motor Co., the same certicates, together with certicate No. 25951 and
several trucks, were sold by De Guzman for the Guzco Transit to Dominador
Raymundo. The approval of this sale was sought from the Public Service
Commission, and is the other case now under review. On the two cases being
heard together, the commission in its decision approved the sale at public auction
in favor of the Luneta Motor Co., and disapproved the sale made to Dominador
Raymundo, reserving to Raymundo the right to present another petition for the
approval of the sale of certicate of public convenience No. 25951 which was not
included in the sale in favor of the Luneta Motor Co.
Sweeping incidental matters to one side, the prime question need not be
complicated by determining if a sale of a certicate of public convenience without
any equipment may be the object of execution and garnishment sale, for this is a
matter of policy to be determined by the Public Service Commission, and it
appears that sales of certicates of public convenience without equipment have
been approved by the commission. Also it is evident that the articles of
incorporation of the Luneta Motor Co. are broad enough in scope to authorize the
company, if it so desires, to engage in the autotruck business, and if not, there
would be nothing to preclude the company from transferring the certicates to a
third party with the approval of the Public Service Commission. Further, the
nature of the partnership which may have been entered into by Nicanor de
Guzman and Agapito C. Correa cannot now be discussed, considering that the
promissory notes were signed Guzco Transit, by Nicanor de Guzman, and
considering that the judgment against Guzco Transit in the Court of First
Instance of Manila has become nal. Finally, the dismissal in case No. 33033

pertaining to certicate No. 25951 was without prejudice, and the appellees
disclaim any interest in this certicate. Therefore, the question to be decided on
this appeal is, which of the two sales, the one at public auction by virtue of an
attachment, or the voluntary sale made after the property had been levied upon,
should prevail and a decision on this question is dependent on a decision relative
to the liability to execution of certificates of public convenience.
The Public Service Law, Act No. 3108, as amended, authorizes certicates of
public convenience to be secured by public service operators from the Public
Service Commission. (Sec. 15 [i].) A certicate of public convenience granted to
the owner or operator of public service motor vehicles, it has been held, grants a
right in the nature of a limited franchise. (Public Utilities Commission vs.
Garviloch [1919], 54 Utah, 406.)
The Code of Civil Procedure establishes the general rule that "property,
both real and personal, or any interest therein of the judgment debtor, not
exempt by law, and all property and rights of property seized and held under
attachment in the action, shall be liable to execution." (Sec. 450.) The statutory
exemptions do not include franchises or certicates of public convenience. (Sec.
452.) The word "property" as used in section 450 of the Code of Civil Procedure
comprehends every species of title, inchoate or complete, legal or equitable. The
test by which to determine whether or not property can be attached and sold
upon execution is whether the judgment debtor has such a benecial interest
therein that he can sell or otherwise dispose of it for value. (Reyes vs. Grey
[1911], 21 Phil., 73.)
It will be noted that the Public Service Law and the Code of Civil Procedure
are silent on the question at issue, that is, silent in the sense of not containing
specic provisions on the right to attach certicates of public convenience. The
same attitude was not assumed in the enactment of Act No. 667, section 10, as
amended, which gave authority for the mortgage and sale under foreclosure
proceedings of franchises granted by provincial and municipal governments. A
similar tendency was evident in the Corporation Law, for in section 56 and
following thereof express provisions were made for the sale on execution of
franchises of the designated classes and of the property used in connection with
them. Should the legislative intention thus evidenced be taken as meaning that
the generality of the language used by the Code of Civil Procedure was too vague
to permit of forced sales of franchises and certicates of public convenience, or
notwithstanding the provisions to be found in these special laws, is the language
of the Code of Civil Procedure broad enough to include certicates of public
convenience? We lean to the latter proposition, and will now proceed to elucidate
our viewpoint.
The test to be applied was announced by our Supreme Court in Reyes vs.
Grey, supra, and there is nothing in Tufexis vs. Olaguera and Municipal Council of
Guinobatan ([1915], 32 Phil., 654), cited by appellant, which sanctions a contrary
test. That rule it will be recalled tested the liability of property to execution by
determining if the interest of the judgment debtor in the same can be sold or
conveyed to another in any way. Now the Public Service Law permits the Public
Service Commission to approve the sale, alienation, mortgaging, encumbering, or

leasing of property, franchises, privileges, or rights or any part thereof (sec. 16

[h]), and in practice the purchase and sale of certicates of public convenience
has been permitted by the Public Service Commission. If the holder of a
certicate of public convenience can sell it voluntarily, there is no valid reason
why the same certicate cannot be taken and sold involuntarily pursuant to
court process.
If this was all that there was to the case, we might hesitate to approve
attachments of certicates of public convenience. But there is more. Certicates
of public convenience have come to have considerable material value. They are
valuable assets. In many cases the certicates are the cornerstones on which are
builded the business of bus transportation. The United States Supreme Court
considers a franchise granted in consideration of the performance of public
service as constituting property within the protection of the Fourteenth
Amendment to the United States Constitution. (Frost vs. Corporation
Commission of Oklahoma [1929], 278 U. S., 515.) If the holder of the certicate
of public, convenience can thus be protected in his constitutional rights, we see
no reason why the certicate of public convenience should not assume
corresponding responsibilities and be susceptible as property or an interest
therein of being liable to execution. In at least one State, the certicate of the
railroad commission permitting the operation of a bus line has been held to be
included in the term "property" in the broad sense of the term. If this is true, the
certicate under our law, considered as a species of property, would be liable to
execution. (Willis vs. Buck [1928], 81 Mont., 472.)
As has been intimated herein before, a practice has grown up in the Public
Service Commission of permitting the alienation of certicates of public
convenience and in so doing approval has been given to the sale through
foreclosure proceedings of the certicates of public convenience to third parties.
The very decision in the two cases before us is an illustration of this practice. The
same tendency is to be noted in the lower courts. As an example in the instant
record, there is a previous foreclosure of a mortgage apparently uncontested. Not
only this, but tacit approval to the attachment of certicates of public
convenience either through chattel mortgages or court writs has been given by
this court. (Orlanes & Banaag Transportation Co. vs. Public Service Commission
[1932], 57 Phil., 634; Manila Electric Company vs. Orlanes & Banaag
Transportation Co. [1933], 57 Phil., 805; Nos 39525 and 39531, Red Line
Transportation Co. vs. Rural Transit Co. and Bachrach Motor Co., November 17,
1933. 1 )
When the motion of the plainti praying that the certicates of public
convenience granted by the Public Service Commission which were attached be
sold at public auction and the answer opposing the granting of the motion on the
ground that franchises can not be the subject of attachment and sale by
garnishhment came before the Court of First Instance of Manila, the presiding
Judge, Anacleto Diaz, promulgated an order which sustained the right of the
plainti to attachment and garnishment. That order gains particular force
because a later judgment by consent was taken and no appeal was attempted to

this court. It is true that the sale further required the approval of the Public
Service Commission, but the Public Service Commission respected the decision of
the court and so we have the concurrence of the court and the commission on
this question. In the order in rst instance appears the following well considered
language:
"It remains to be determined whether, under the law, certicates of
public convenience are liable to attachment and seizure by legal process. The
law is silent as to this matter. It can not be denied that such franchises are
valuable. They are subject to being sold for a consideration as much as any
other property. They are even more valuable than ordinary properties,
taking into consideration that they are not granted to every one who applies
for them but only to those who undertake to furnish satisfactory and
convenient service to the public. It may also be said that dealers in motor
vehicles even extend credit to owners of such certicates or franchises. The
law permits the seizure by means of a writ of attachment not only of
chattels but also of shares and credits. While these franchises may be said
to be of intangible character, they are however of value and are considered
properties which can be seized through legal process.
"For all the foregoing, the court is of the opinion that the plainti is
entitled to the remedy it prays for in its motion which is hereby granted."

The ruling of the Supreme Court on the question raised by the record and
the assignments of error is this: Certicates of public convenience secured by
public service operators are liable to execution, and the Public Service
Commission is authorized to approve the transfer of the certicates of public
convenience to the execution creditor. As a consequence, the decision brought on
review will be affirmed, with costs against the appellant.

Avancea, C.J., Villa-Real, Hull and Imperial, JJ., concur.

Footnotes
1.

Page 976, post.